Money Making and Saving in 2020 sounds like an impossible task given the world as it is right now! They say that “old habits die hard.” New research, however, shows that it may not take that long to create new ones.
According to a study published in the European Journal of Social Psychology, which monitored 96 participants for 12 weeks, it took an average of 66 days for participants to develop deeply ingrained habits that then actually stuck. If you believe that research, that means that in a little over two months, most of us could really change our lives.
One thing that the COVID-19 pandemic has made clear to many people is that they need to develop better saving habits. After years of not really listening to the advice many have found that yes, that rainy day fund they always meant to start, but never got around to, really would have been helpful to have.
And with the world economic forecast being anything but rosy increasingly those who maybe never had before are thinking more seriously about things like saving for retirement.
All this though, will call for the adoption of some new financial habits. And it is some of those habits we are going to look at here today. Better still? Some of them will even make you money too.
Money Making and Saving in 2020
Habit #1: Paying your bills on time
This is an excellent habit to form for several reasons. First, it will save you the unnecessary late fees that result from late payments. And second, it might save you from the higher interest rates charged to those who pay late. As your payment history can make up as much as 35% of your credit score, prompt bill payments should help increase your credit score over time.
How to form this habit: If your bills are not organized, it is a lot easier to pay them late by accident. To form a healthy relationship with your bills, you could consider several strategies, including:
Pay bills once or twice per month. Consider paying bills on the first and the 15th of the month, depending on when they are due.
Set bills you worry about on autopay. Bills you are likely to forget can be set on autopay for a certain day of the month.
Money Making and Saving in 2020
Habit #2: Creating a monthly budget
We have written about budgeting multiple times, and about lots of different kinds of budgets. But the truth is any type of budget will do — as long as you use it.
Instead of thinking of your budget as a restriction on your life, try to think of it as a powerful tool — a plan for your money.
How to form this habit: If you opt for a monthly budget, you only have to create one 12 times per year. That is probably the easiest route to go, and it is definitely the least time-consuming.
Like any other priority, mark your budgeting date and the deadline on your calendar near the end of a month — or at the beginning of the next one. Then, sit down and create your monthly budget on that date. Use software, a notepad, whatever it takes, but make sure it gets done.
Money Making and Saving in 2020
Habit #3: Investing regularly and increasing contributions as you earn more
To build your nest egg over time, you need to invest on a monthly basis at the very least. Experts suggest contributing 5% to 10% of your salary at first and ratcheting it up from there as your income allows.
You should make the effort to get the ‘biggest bang for your buck’ for this money though, and that usually will not come from simply socking away money in a standard savings account. Instead, consider sitting down with a financial advisor who can help you make the best plan using the money you have available.
How to form this habit: Set a specific date on your calendar to sock money away. If you are using a monthly budget, make a habit of “paying your investments” as if they were a regular bill.
Money Making and Saving in 2020
Habit #4: Make savings a priority
Just like investing, you have to save regularly to build up a savings buffer over time. And no matter whether you are building an emergency fund, saving for a house, or saving for the future with no specific goal in mind, it is consistency that will help you reach your goals.
How to form this habit: If you have started using a budget, utilize it to help reach your savings goals. Create a line item for “savings” and pay your own savings account as if it were a regular bill. Or, if you want to make it automatic, set your bank account up to automatically withdraw a certain dollar figure on payday or any other day that works.
Money Making and Saving in 2020
Habit #5: Stick to Your Plan, No Matter What
When trying to create a new habit, research has shown that repetition is key. Unfortunately, the opposite is also true — not performing the new habit can quickly make you forget it altogether.
If you want to reach your financial goals, it is important to keep moving full steam ahead — even if you have a bad day, experience a financial mishap, or just want to give up.
How to form this habit: While staying on the bandwagon can be a drag, it can be done With a monthly budget, for example, one bad day should not be enough to knock you off track for good. Meanwhile, an automatic savings and investing plan will help you keep saving no matter what.
Money Making and Saving in 2020
Habit #6 Make Money by Saving on Daily, Weekly, and Monthly Purchases
While a wonderful way to stay on track is to have a budget, it is also important to keep your expenses as low as possible. If you are not careful, ordinary expenses will add up over time, and there are ways to save on anything if you are willing to put in the effort.
How to form this habit: It may seem difficult to save on everything, but it is not nearly as hard as it seems. It all starts with your small bills, including groceries, petrol, entertainment, and more.
For example, getting into the habit of shopping for food with coupons and price comparison sites can save you a lot more than you might think per month. And that money is like ‘made money’, extra cash you can then use to invest more, save more, or indulge in the occasional splurge on something frivolous without blowing your carefully crafted monthly budget.
It will take you 66 days to form these habits and you are on track to have this done by Christmas, good luck. For further advice on investing and saving speak to one of our Financial Consultants for expert advice.
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